Andrew Cuomo, Turnaround CEO

The HUD secretary is borrowing ideas from business to reinvent one of Washington's most maligned agencies.

By
Ronald Brownstein

How is a massive federal agency like a commercial bank? What can the design of government buildings borrow from that of hip retail outlets like the Gap? What can one of the fathers of reengineering teach the leader of a U.S. Cabinet department?

Andrew Cuomo, the 40-year-old secretary of housing and urban development (HUD), and the heir to one of liberalism's most famous names, is asking himself these questions as he pursues one of Washington's most daunting challenges: proving that the HUD bureaucracy can convert good intentions into concrete results.

HUD was launched with great expectations during the Great Society era, but its recent history has been one of obscurity punctuated by ignominy. Ronald Reagan once failed to recognize his own HUD secretary at a reception. Its decaying high-rises are a universal symbol of government failure. So chaotic are its internal operations that the General Accounting Office once designated it, alone among federal agencies, as a "high risk" for fraud and abuse.

Cuomo's response: Identify best practices for change inside big companies, and apply them to his giant agency (annual budget: $24 billion). It's an idea at the heart of the Clinton administration's many "reinventing government" initiatives. But few Washington officials have faced odds as long as those faced by the HUD secretary - or borrowed so directly from cutting-edge business practices. Cuomo has sought advice from change guru James Champy, coauthor with Michael Hammer of Reengineering the Corporation (HarperCollins, 1993); screened Tom Peters videos for his senior staff; and hired Gensler, one of the world's most influential architecture and design firms, to change - literally - the face of HUD.

"Our reorganization is doing with government what the private sector did in the 1980s," Cuomo says. "You have to tweak some ideas to make them work. But the basic points are right for us."

Like most turnaround CEOs, Cuomo began by rationalizing and reorganizing. HUD is a tangle of 89 separate financial-management systems, most of which don't communicate with one another. Although it supervises thousands of housing projects, and deals with thousands of landlords who provide housing for low-income families that receive federal vouchers, the department has no single system for assessing the physical and financial condition of its properties. HUD is now streamlining these processes. It is also cutting its workforce - which will shrink from 9,200 people this year to 7,500 by 2000.

But Cuomo's blueprint for change gets really interesting when it moves from internal structures to how HUD interacts with the outside world. One of his goals is to increase dramatically the interactivity between HUD and its customers, including community groups and rank-and-file citizens. For example, Cuomo plans to install Web kiosks in government buildings. Such connectivity tools, he believes, are a way to share more information with community groups - which can, in turn, better monitor how HUD spends its money.

That information can be intricately detailed. Cities that receive HUD money (and they include just about any place bigger than a one-post-office town) are required to write detailed community-development plans. Cuomo wants to capture these plans using advanced mapping software (developed by HUD) and then invite neighborhood groups and citizens to comment on them. "The way we live today," Cuomo says, "people don't even take two hours on a weeknight to go to a movie. So they're not going to spend two hours sitting through a hearing at City Hall. Technology is a vehicle to get people engaged."

James Champy, the Boston-based chairman of consulting for Perot Systems, was a catalyst for another idea. Like any turnaround leader, Cuomo is eager to lower costs and improve service. Champy urged HUD to learn from commercial banks. Over the past decade, he argued, banks have centralized their far-flung back offices and transformed their mausoleum-like front offices into more inviting retail spaces. "It's almost a law of physics that you can consolidate transactional operations and get incredible efficiencies," Champy says. "Then you can let the front offices deal with local issues."

Cuomo bought into the idea. HUD is consolidating its widely scattered administrative sites into a handful of automated processing centers. Fewer buildings and fewer people have meant better service. In the Denver region, for example, the average time to process home-insurance claims has declined from more than one month to just two days. Cuomo has established an agency-wide goal: 24 hours.

Meanwhile, HUD has rethought the role of its street-level front offices. Cuomo aide Karen Hinton asked Gensler to create a fresh look for HUD's offices. "The initial expectation was to show HUD to the community in an entirely different light - in effect, to deinstitutionalize the agency," says Richard Logan, the Gensler vice president who took the job.

Logan's design fused the corner bank with the coffee shop from "Friends" - glass and exposed beam, lots of upholstered chairs. Gensler even helped name the new centers: HUD Next Door. The first HUD Next Door will open later this year near Washington's Union Station. By 2002, all of HUD's offices will reflect the new design.

Cuomo's long-term plan involves other, more ambitious changes as well. For example, the agency is tearing down 100,000 of its worst public-housing units. HUD will provide tenants with rental vouchers, or replace the units with scatter-site developments built in partnership with local businesspeople or community-development corporations. "I'm not going to create my own economy," Cuomo says. "I'm not going to build the bridge or the housing myself. I'll let the private markets do it."

Seasoned HUD watchers admire this ambitious agenda but are skeptical about its chances. Time and again, they've seen the agency deflect reformers. Change gurus have their own concerns. Bureaucracies are like Russia: They don't so much defeat invaders as outlast them. Champy wonders if HUD's top team will stay the course long enough to see breakthrough results.

That's a reasonable question. Andrew Cuomo is already being touted as a possible Senate candidate and even as a potential running mate for Al Gore in 2000. But Cuomo insists that he isn't going anywhere - which could make his backwater agency the site of one of the most intriguing experiments in Washington over the next few years. "I have to get into the way people live now," Cuomo says. "Otherwise, government's going to become irrelevant."

Ronald Brownstein (rbrownstein@usnews.com) is national political correspondent for U.S. News & World Report and a regular contributor to Fast Company.

A version of this article appeared in the April/May 1998 issue of Fast Company magazine.